Social Security Choices

Frequently Asked Questions

General Informational Issues

Q: Should I claim my benefits earlier because of Social Security's financial problem?
A: For this question we agree with the following advice given in the "The Social Security Claiming Guide" (Steven Sass, Alicia H. Munnell, and Andrew Eschtruth; Boston College, Center for Financial Literacy):

"Contrary to popular belief, the sky is absolutely not falling for Social Security. With modest tweaks, we can ensure solvency and even strengthen benefits for those who count on their monthly check the most."

If you are interested in reading more about this please see an excerpt from Senator Herbert Kohl, Democrat - Wisconsin, Chair Special Committee on Aging; May 18, 2010 or the complete committee report.

According to the 2010 Social Security trustees' report, the Old Age and Survivor's Trust Fund is solvent through 2037. At that point, tax revenues would be sufficient to cover 75 percent of Social Security benefits if no changes are made before that time. So, bankruptcy is not the issue. The real issue is what combination of tax increases and benefit cuts will occur between now and roughly 2037.

Q: Can the Social Security Administration calculate Social Security Wealth for me?
A: No. We generate these wealth measures with proprietary software not available to Social Security.

Q: Can't Social Security tell me which benefits I qualify for?
A: In principle, the answer is yes. In practice, the answer is "maybe." We have found that Social Security representatives all-too-often are not fully aware of all the benefit choices available to people, especially married couples.
Even if a representative correctly informs you about which benefits are available to you, they will not be able to tell you, with any precision, when you should claim which benefits. They simply do not have the training needed to answer the timing question.

Q: Does this website offer complete financial planning?
A: No. Our advice is limited only to the issue of when to claim which Social Security benefits. We recommend that you contact a fee-only financial advisor for help with other financial planning issues.

Client Report

Q: How do I view my report?
A: The report is in PDF format, so you need Adobe Reader to read it. If you don't have Adobe Reader, you can get it for free at the Adobe website. The website will automatically detect your system configuration and advise you to download the correct version of the software. Follow the directions provided on the site to download and install the software.

Q: Why do I see gibberish when I print my report?
A: We have learned of a bug that impacts the printing of some PDF documents for Windows XP users. We suggest the following steps to work around this problem.

If this does not solve the problem, please email us for additional assistance.

Q: What is "Social Security Wealth"?
A: In short, Social Security Wealth is an estimate of how much the expected future time stream of your Social Security benefits (and, if married, your spouse's benefits) are worth in today's dollars. For a detailed explanation, see our discussion on Calculating Social Security Wealth.

Q: The tables in the married person's report contain many minus (or negative signs). What do the minus signs mean?
A: The minus (or negative signs) in a specific cell indicate that, relative to the optimum choice of claiming years, the claiming strategies underlying that specific cell lead to a lower Social Security Wealth (SSW) than the optimum. For instance, -$35k in a cell would indicate that the choices corresponding to that cell lead to SSW that is $35,000 less than the optimum amount. If the optimum SSW was $400,000, the entry of -$35k indicates a SSW of $365,000.

Q: How can you provide me with personalized Social Security claiming recommendations when you request from me very little personal information?
A: We need surprisingly little information from you (and, if married, from your spouse) in order to figure out your optimal claiming strategy. The key things we need are 1) your marital status, 2) your monthly benefit(s) at full retirement age, and 3) your selections for alternative life expectancies.
First, your marital status allows us to establish which benefits may be available to you. Second, your monthly benefit amount at your full retirement age allows us to determine the full array of benefits available to you between 62 and 70 (or between 60 and 70 if you are a qualifying widow(er)). Third, your selection of alternative life expectancies (combined with the benefit information) allows us to calculate your Social Security Wealth for a potentially large number of claiming choices open to you. It is this measure that reveals your optimal claiming strategy.

Q: I know Social Security benefits grow if I delay claiming them. But can't I do better financially by claiming benefits as early as possible and investing that money in stocks, bonds, or real estate?
A: It is unlikely that you can pull this strategy off successfully. First, personal investing can easily yield negative returns as we have all learned during the recent recession. Note that the S&P 500 stock index was lower at the end of 2010 than it was 10 years earlier. In contrast, the Social Security benefit increases from claiming later in life are guaranteed and inflation protected. For more details on this issue see Lynn Brenner's Blog Post on Postponing Social Security Benefits.
Another problem with the strategy suggested in the above question is that individual investors, on average, fare more poorly than does the overall market. For example, one financial expert notes the following: For the twenty years ending 12/31/2008 the S&P 500 Index had average gains of 8.4 percent a year. In contrast, the average individual investor in equity funds earned a return of only 1.9 percent annually as a result of poor timing decisions.